Secure Funding Pty Ltd v Close
[2024] FedCFamC2G 1447
•27 September 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Secure Funding Pty Ltd v Close [2024] FedCFamC2G 1447
File number(s): SYG 1664 of 2024 Judgment of: JUDGE CAMERON Date of judgment: 27 September 2024 Catchwords: CONSUMER LAW – mortgagee seeking possession of mortgaged goods following default in compliance with finance agreement. Legislation: National Credit Code
Personal Property Securities Act 2009 (Cth)
National Consumer Credit Protection Act 2009 (Cth)
Division: General Number of paragraphs: 19 Date of hearing: 27 September 2024 Place: Sydney Counsel for the Applicant: Ms E L Phelan Solicitor for the Applicant: Agility Law Group Respondent: No appearance by or on behalf of the respondent ORDERS
SYG 1664 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: SECURE FUNDING PTY LTD ABN 25 081 982 872
Applicant
AND: COURTNEY CLOSE
Respondent
ORDER MADE BY:
JUDGE CAMERON
DATE OF ORDER:
27 SEPTEMBER 2024
THE COURT ORDERS THAT:
1.Pursuant to section 101 of the National Credit Code (the Code) the respondent and/or any party in possession of the Collateral, being a 2017 Toyota C-HR Hatchback bearing the identification:
(a)VIN Number: JTNLY3FX801001589
(b)Engine Number: 8NRU136360
(c)Registration Number: 1XD9HF
deliver and/or surrender the Collateral (including any key to the Collateral), and/or provide the location of the Collateral, to the applicant and/or its agent at a time and place nominated by the applicant and/or its agent.
2.Pursuant to clause 8.4(b) and (f) of the Agreement, the applicant and/or its duly appointed agent be permitted to enter onto and remain at any of the premises below and to take any and all reasonable step(s) in order to take possession of the Collateral:
(a)XXXX NSW XXXX; and/or
(b)Any other premises in Australia over which the respondent has apparent control and at which the Collateral is reasonably believed to be located.
3.The respondent pay the applicant its costs of the application fixed in the amount of $6,265.85 pursuant to items 2 and 9(a) –(b) of Schedule 2 to the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), including filing fee for the application in the sum of $470.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE CAMERON
INTRODUCTION
This proceeding concerns a 2017 Toyota C-HR Hatchback VIN: JTNLY3FX801001589, Engine No: 8NRU136360 and Registration No: 1XD9HF, having been changed from its previous Registration No: DQH12D (Vehicle), whose purchase by the respondent, Ms Close, was funded by a loan agreement (Agreement) she entered into with the applicant, Secure Funding Pty Ltd, in September 2022. The respondent defaulted on her obligations under the Agreement and subsequently failed to comply with a notice of default issued on 8 January 2024 (Notice). In this proceeding the applicant seeks orders that will result in it obtaining physical possession of the Vehicle.
This application was brought pursuant to the National Credit Code (Code) under the Court’s Small Claims jurisdiction and sought relief under s.123 of the Personal Property Securities Act 2009 (Cth) (PPS Act).
LEGISLATION AND RULES
The Code is contained in sch.1 of the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act). The Code relevantly provides:
4 Meaning of credit contract
For the purposes of this Code, a credit contract is a contract under which credit is or may be provided, being the provision of credit to which this Code applies.
88Requirements to be met before credit provider can enforce credit contract or mortgage against defaulting debtor or mortgagor
Enforcement of credit contract
(1)A credit provider must not begin enforcement proceedings against a debtor in relation to a credit contract unless:
(a) the debtor is in default under the credit contract; and
(b) the credit provider has given the debtor, and any guarantor, a default notice, complying with this section, allowing the debtor a period of at least 30 days from the date of the notice to remedy the default; and
(c) the default has not been remedied within that period; and
…
Enforcement of mortgage
(2) A credit provider must not begin enforcement proceedings against a mortgagor to recover payment of money due or take possession of, sell, appoint a receiver for or foreclose in relation to property subject to a mortgage, unless:
(a) the mortgagor is in default under the mortgage; and
(b) the credit provider has given the mortgagor a default notice, complying with this section, allowing the mortgagor a period of at least 30 days from the date of the notice to remedy the default; and
(c) the default has not been remedied within that period.
…
Default notice requirements
(3)A default notice must contain a prominent heading at its top stating that it is a default notice and specify:
(a) the default; and
(b) the action necessary to remedy the default; and
(c) a period for remedying the default; and
(d)the date after which enforcement proceedings in relation to the default, and, if relevant, repossession of mortgaged property may begin if the default has not been remedied; and
(e)that repossession and sale of mortgaged property may not extinguish the debtor’s liability; and
…
99 Entry to residential property to take possession of goods
(1) A credit provider, or an agent of a credit provider, must not enter any part of premises used for residential purposes for the purpose of taking possession of mortgaged goods under a goods mortgage unless:
(a) the court has authorised the entry; or
(b)the occupier of the premises has, after being informed in writing of the provisions of this section, consented in writing to the entry.
…
100 Court may order entry
The court may, on the application of a credit provider that is entitled to take possession of mortgaged goods, authorise the credit provider to enter residential premises for the purpose of taking possession of mortgaged goods.
101 Order for possession
(1)The court may, on the application of a credit provider that is entitled to take possession of mortgaged goods, order a person who has possession of the goods to deliver them to the credit provider at a specified time or place or within a specified period.
…
102Procedures to be followed by credit provider after taking possession of goods
…
Goods not to be sold immediately
(2)A credit provider must not dispose of goods taken under the mortgage within 21 days after the date of the notice, unless the court authorises the credit provider to do so.
The NCCP Act otherwise relevantly provides:
199 Plaintiffs may choose small claims procedure
Application for small claims procedure
(1) Proceedings are to be dealt with as small claims proceedings under this section if:
(a) a person applies to a magistrates court, local court or the Federal Circuit and Family Court of Australia (Division 2) for an order covered by subsection (2); and
(b)the person indicates, in the manner (if any) prescribed by the regulations or by the rules of the court, that the person wants the small claims procedure to apply to the proceedings.
Section 123 of the PPS Act relevantly provides:
123 Secured party may seize collateral
(1)A secured party may seize collateral, by any method permitted by law, if the debtor is in default under the security agreement.
…
Section 10 of the PPS Act defines "collateral" as “personal property to which a security interest is attached”.
"Security interest" is defined by the PPS Act, relevantly, in the following terms:
12 Meaning of security interest
(1) A security interest means an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property).
(2) For example, a security interest includes an interest in personal property provided by any of the following transactions, if the transaction, in substance, secures payment or performance of an obligation:
(a) a fixed charge;
(b) a floating charge;
(c) a chattel mortgage;
(d) a conditional sale agreement (including an agreement to sell subject to retention of title);
(e) a hire purchase agreement;
(f) a pledge;
(g) a trust receipt;
(h) a consignment (whether or not a commercial consignment);
(i) a lease of goods (whether or not a PPS lease);
(j) an assignment;
(k) a transfer of title;
(l) a flawed asset arrangement.
…
AGREEMENT
The Agreement relevantly stated:
4. What you must pay and when
What you must pay
4.1 You must repay us all amounts you borrow from us and you must pay us interest charges, our fees and charges and government charges and any enforcement expenses.
Repayments
4.2 You must pay the repayment amounts we require.
4.3 We calculate the repayment amounts so that the:
(a) Amount of credit; and
(b) all interest charges, and other fees and amounts we notify you as being included in the repayment amount which accrue or become payable during the loan term,
are repaid during the loan term.
…
8. Defaults
When are you in default?
8.1 You are in default if:
(a) You do not pay on time all amounts due under this agreement; or
…
What can happen then?
8.2 If you are in default, we may give you a notice stating that you are in default.
If you do not, or cannot, correct the default within any period given in the notice or required by law (or if you are in default again for a similar reason at the end of that period), then, at the end of that period and without further notice to you, the total amount owing becomes immediately due for payment (to the extent it is not already due for payment).
We may then sue you for the total amount owing, or enforce any security, or do both.
…
8.4 In enforcing any security interest under clause 11, we may do one or more of the following (subject to any applicable laws):
…
(b) take possession of the goods; or
…
11 Security interest in the Goods
…
11.2 You acknowledge that:
(a) You grant us a security interest in the goods; and
(b)that security interest secures the payment of all money and the performance of all obligations owing or assumed by you under this agreement.
…
Dealing with the goods
11.18 You must get our written consent before you:
…
(d) alter the goods or any identifying marks (including any vehicle identification number or other serial number); or
…
15 Meaning of words
Security interest means:
(a)Any mortgage, charge, lien, pledge, trust, power or other rights given as or in effect as security for the payment of money or performance of obligations; or
(b)a right, interest or an arrangement which has the effect of giving another person a preference, priority or advantage over creditors including any right of set-off; or
(c)third party interest or any right arising as a consequence of the enforcement of a judgment; or
(d)a guarantee or an indemnity; or
(e)anything that is defined to be a “security interest” under a PPS law.
PROCEEDING IN THIS COURT
In the application commencing this proceeding, the applicant sought the following by way of final relief:
1.The Respondent pay the Applicant a sum, to be quantified, pursuant to clause 4.1 of the Consumer Loan Agreement Standard Terms and Conditions that forms part of the Contract entering into between the Applicant and Respondent.
However, that relief was not pursued at the final hearing. Instead, the final relief the applicant sought was relief it had originally sought as interlocutory relief:
…
3. An order pursuant to section 101 of the National Credit Code (the Code) that the Respondent and/or any party in possession of the Collateral, being a 2017 Toyota CHR Hatchback, with the details:
VIN Number: JTNLY3FX801001589
Engine Number: 8NRU136360
Registration Number: 1XD9HF
State of Registration: Victoria
deliver, surrender and/or provide the location of the Collateral to the Applicant and/or its Agent.
4. An order pursuant to clause 8.4(b) and (f) of the Contract terms and conditions that the Applicant and/or its duly appointed Agent be permitted to enter onto, and remain at, any premises and to take any and all reasonable step(s) in order to take possession of the Collateral, from either of the following premises:
a. XXXX New South Wales XXXX; or
b. Any other premises in Australia at which the Collateral is reasonable believed to be located.
5. An order that the Applicant and/or its duly appointed agent be assisted by any officer of any Australian State or Territory Police for the purpose of taking possession of or taking any reasonable action to facilitate the peaceful removal of the Collateral from such premises.
6. Should the Respondent, or any person in possession of the Collateral following service of these orders, fail to surrender or divulge such information regarding the whereabouts of the Collateral, so as to enable possession to be taken of the Collateral, the Applicant and/or its duly appointed agent be permitted to report the Collateral as stolen and enter the action on the Personal Properties Securities Register.
7. The Respondent pay the Applicant costs pursuant to Schedule 2 Part 1 of the Rules.
APPLICATION FOR SUBSTITUTED SERVICE
On 30 August 2024 the applicant was granted leave to be legally represented and an order for substituted service on the respondent was made.
The affidavit of Jasmine Law dated 13 September 2024 satisfy me that the following documents were served in accordance with those orders:
(a)orders dated 30 August 2024;
(b)originating application filed on 19 July 2024;
(c)affidavit of Robert William Foster dated 18 July 2024;
(d)affidavit of Darren Martin dated 5 August 2024;
(e)affidavit of Jasmine Layla Law dated 15 August 2024;
(f)affidavit of Christina Maya Simonidis dated 16 August 2024; and
(g)affidavit of Christina Maya Simonidis dated 26 August 2024.
BACKGROUND
The following facts, which I find, are drawn from the affidavit of Robert Forster affirmed 19 July 2024.
On about 7 September 2022, the parties executed the Agreement to finance the purchase of the Vehicle. The amount lent was $34,122.80 at a rate of 15.99% per annum and the agreement required the respondent to repay the loan by 60 monthly instalments or repayments of $839.62. The applicant’s security interest was registered on the Personal Property Security Register on 9 September 2022, and is current.
In or around 9 February 2023, the respondent defaulted on her obligations under the Agreement by failing to pay the monthly instalment then due. On 8 January 2024, the applicant issued the Notice to the respondent requiring her to pay $7,433.67 within 31 days, which she failed to do. In that connection, I should observe that a default has the effect of accelerating outstanding payments.
Mr Forster annexed to his affidavit copies of the following documents:
(a)the Agreement;
(b)a Personal Property Securities Register search certificate dated 17 July 2024 concerning the Vehicle; and
(c)the Notice.
CONSIDERATION
The evidence satisfies me that the material requirements of s.88 of the Code have been satisfied, including the Code's requirements as to the content of the notice. Specifically, I am satisfied (a) as to the validity of the existence of debt, (b) the validity of the existence of a breach of the terms of the Agreement as between the applicant and the respondent, (c) the service of the Notice on the respondent and (d) the respondent's failure to respond to the Notice.
I am also satisfied that the Vehicle is “collateral”, as that word is defined in the PPS Act, and that the security interest in question is in the nature of a charge over the Vehicle which falls within the PPS Act definition of mortgage. Consequently, I find that the applicant has demonstrated that it is entitled, under both the Agreement and the PPS Act, to take possession of the Vehicle.
CONCLUSION
The applicant has provided a draft of the orders it seeks and I consider that they are suitable and appropriate to the circumstances. There will be orders to that effect, subject to my recalculation of the costs claimed by the applicant, which I calculate to total $6265.85.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Cameron. Associate:
Dated: 20 December 2024
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